Count the TV audience? Not so easy to do these days

Like Barry Allen of CW's "The Flash," the changes in TV viewing habits are moving at superhuman speeds. And the industry, which relies on accurate measurements of audiences, is racing to catch up.

While the majority of viewers watch the old-fashioned way — live and seated in front of a TV screen — new technologies are rapidly transforming the way programming is consumed. The upending of television is being led by digital video recorders, video on-demand and streaming sites such as Netflix, Hulu and Amazon that can be watched on mobile phones and tablets as well.

The new TV behavior patterns, which are expanding as viewers become more comfortable with technology, are dramatic and come with potentially far-reaching consequences for the industry. This season, time-shifting has accounted for 37% of non-rerun, non-sports viewing up to seven days after day-of-air on the four major broadcast networks, according to Nielsen. That's up from 33% at the same time last year and up significantly from just 26% in 2009.

The bigger the window, the more pronounced the trend appears. An estimated 14 million people watched the premiere of Fox's Batman-inspired series "Gotham" in the 30 days after it aired, a huge increase from the 8.3 million who tuned in on the day of the show's premiere.

The problem: At least 5 million of those "Gotham" viewers don't count in Nielsen's ratings, the main currency for TV networks and advertisers.

Nielsen's metric doesn't include those who watched the episode on streaming sites like Hulu or Fox's own website, nor does it count those who watch via video-on-demand more than four days after the original airing. That's an issue for networks that want to use those viewership totals with advertisers.

"There's value in those viewers who are time-shifting," said Will Somers, head of research at Fox.

Overall, people are likely spending more time with television programming, given all the ways they can watch. The downside for networks is that they are viewing increasingly in nontraditional ways that make it harder for networks to make money.

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The major broadcasters are trying to show advertisers how many people are really watching their shows at the same time as the live TV audience dwindles. Overall television ratings are down from a year ago, despite strong results from some newcomers. Total prime-time viewership among the key 18-49 demographic was down about 10% on average over the last two quarters.

Doug Creutz, an analyst at Cowen and Co. in San Francisco, said the trend could be a troubling sign for the big media companies. The time-shifted viewing measured by Nielsen is not making up for the decline in the drop-off in live ratings.

Also cutting into the network's overall ratings is the rise of online streaming services. Subscribers between ages 18 and 54 watch about 20% less traditional TV than before, according to Nielsen, which for the first time next month will begin measuring audiences for the streaming services. (Nielsen won't include data from shows watched on mobile devices, however, since they don't have the technology yet to do so.)

Most returning network TV shows are down, noted Creutz, while new picks haven't picked up the slack. This environment could foreshadow a future in which digital media eats more of TV's slice of the advertising market.

"Probably for the first time, there's real evidence that national television is coming under pressure from an audience perspective and an advertising perspective," Creutz said. "The question is, how much?"

Analysts and advertising firms say brands are increasingly taking more of their money to the Web rather than the traditional tube, even as critics say the industry is experiencing a golden age in television programming quality.

That's partly because advertisers are reluctant to buy time based on numbers of DVR users, who can easily skip ads. Also, some ads don't work if people see them a week late. Film studios, for example, want people to see commercials before a movie hits theaters.

"No one wants their Halloween message seen on the first of November," said Darcy Bowe, a vice president at advertising company Starcom USA.

In a note to clients in October, BTIG analyst Rich Greenfield went further in expressing skepticism.

"Ads are not watched on DVRs no matter what studies from Nielsen indicate and torturing consumers with unskippable ad breaks ... cannot possibly be the correct answer for a brand trying to build a meaningful relationship with consumers," he wrote.

Network executives push back against the naysayers, arguing that the prevalence in ad-skipping with DVRs is overblown. After all, people have been avoiding advertising all along, and even those watching live TV can leave the living room during the commercial break. (Video on-demand does not allow ad-skipping.)

The big broadcasters, CBS, NBC, Fox and ABC, are trying to get the data crunchers who analyze TV ratings to pay more attention to the lifts shows receive from delayed viewing rather than fixating on the initial viewership counts. The companies have even begun including projections for the three-day and seven-day upticks in their morning releases to journalists.

Nielsen is working on ways to include more of the audience in its measurements, such as those who watch while away from home and on smartphones and tablets. Earlier this month it revealed the results of a test in Chicago that said ratings got a 7% to 9% lift from the inclusion of out-of-home viewing (meaning people watching at bars or at the gym).

Dounia Turrill, senior vice president of client insights at Nielsen, is optimistic about the state of the TV industry as a whole. Giving consumers more ways to watch shows means they can experiment with and keep up with more shows than ever.

"We definitely feel that video consumption overall is increasing, fueled by this opportunity for extra discovery," said Turrill.

Before the advent of new TV technologies, many shows — particularly those with serialized story lines — were hard-pressed to build an audience if they didn't debut strongly. But once streaming services began airing old programming, viewers could find or catch up with shows they might originally have missed.

One of the most notable examples is the AMC drama "Breaking Bad." The dark series about a chemistry teacher turned meth dealer saw its audience — and its Emmy recognition — skyrocket once Netflix began offering past seasons to its tens of millions of subscribers.

Some advertisers have been willing to make deals with networks based on the seven-day viewing window. But TV has a long way to go before the industry can translate its big nonlive audiences into advertising dollars.

"The holy grail is the ability to measure everyone across all platforms," said Alan Wurtzel, head of research at NBC. "No one is doing that yet."